In the Media
Katrina’s Insurance Lessons Ever Relevant 20 Years Later
Read Time: 1 minHurricane Katrina’s landfall in New Orleans 20 years ago was an unprecedented catastrophe that resulted in financial consequences and insurance lessons that are more relevant today than ever.
Jim Donelon, former Louisiana Insurance Commissioner from 2006 to 2024, now serves as Special Counsel with McGlinchey Stafford. He spoke with Law360’s Insurance Authority about the aftermath of the disaster and its implications for the insurance industry.
After Katrina, insurance commissioner Donelon recalled how his own state’s last-resort insurance pool — Louisiana Citizens Property Insurance Corp. — faced its own difficulties. They were also amplified following the hit of Hurricane Rita, a Category 5 storm, three weeks after Katrina.
He said that Citizens, which was modeled off Florida’s last-resort insurance program, was designed in such a way so that the risk of disasters was transferred from being borne by the insurers doing business in the state, to the policyholders in the state.
“Sure enough, after Katrina, we had a shortfall — we didn’t have very much reinsurance at all, and not much in the way of assets,” Donelon said. “But we had the authority, and the duty and obligation, to assess every policyholder in the state, including commercial policies, as well as residential. Admitted companies as well as surplus lines.”
The assessment totaled $193.5 million, helping Citizens to begin paying claims from Katrina and Rita, he said. Donelon recalled traveling to New York and being joined by speakerphone with then-Louisiana Gov. Kathleen Blanco, to raise money for a 2006 Citizens bond issue to finish paying its Katrina claims. The final bond payments were made last year.
Read the full article here (subscription required).